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April 21, 2020

Various Defaults and Penalties under Income Tax Act – Finance Act 2020 from April 2020

Various Defaults and Penalties under Income Tax Act – Finance Act 2020 from April 2020

Offence means a breach of law or rule, offence is an illegal act committed by a person. A penalty is a punishment imposed by law for committing an offence.  Assessee & Taxpayers who commits any offence under the provisions of the Income Tax Act shall be liable for penalty or prosecution. The penalty is usually levied in addition to the amount of tax paid under the act. Penalty is to be levied at the time the offence is being committed and not as it stands in the financial year for which the assessment year is being made. The various penalties covered under the Income tax act 1961 are as under:

SectionNature of defaultAmount of penaltyImposed byNotes
221(1)Failure to pay the whole or part of the assessment tax or TDS or TCSAmount of tax in arrearsAssessing officerThis is in addition to interest under section 220
270AMisreporting or underreporting of income50% of tax on under reported income and 20% of tax on mis reported incomeAO or CIT or CIT(A) 
271AFailure to keep, maintain or retain books of account as required by section 44AARs. 25,000AO or CIT(A) 
271AAFailure to keep and maintain information and documents as required u/ 92D i.e. transfer pricingFails to report such transaction which he is required to do so; orMaintains or furnishes an incorrect information or document2% of the value of transactionAO or CIT(A) 
271AABUndisclosed income found in search30% or 60% of disclosed incomeAOPenalty in case of search: Rate of 30% shall applyIf assessee during search admits the undisclosed incomeSpecifies the manner in which such income was earnedPays tax plus interest on undisclosed income andFurnishes the return of income declaring undisclosed income before due date or date specified in Income tax noticeRate of 60% in other cases
271AACUnaccounted income10% of tax on unaccounted incomeAssessing officerPenalty shall not be leviable if such income is offered in returnNo penalty on unaccounted income shall be levied u/s 270A i.e. misreporting or underreporting of income
271BFailure to get accounts audited up to due date u/s 44AB0.5% of Sales turnover or gross receipts (Subject to maximum of Rs. 1,50,000Assessing officerIf books are not maintained penalty u/s 271A shall be levied and not u/s 271B
271BAFailure to furnish report of CA u/s 92E i.e. transfer pricing reportRs. 1,00,000Assessing officer 
271BBFailure to obtain TAN numberRs 10,000Assessing officer 
271CAFailure to collect TCSSum equal to the amount of tax which such person failed to collectJCIT 
271CFailure to deduct TDSSum equal to the amount of tax which such person failed to deductJCIT 
271DAny loan or deposit or specified advance is taken or accepted in contravention of section 269SSAmount of the loan or deposit so taken or acceptedJCIT 
271DAAny transaction of Rs. 2,00,000 or more in contravention of section 269STSum equal to amount receivedJCIT 
271DBFailure to accept payment through prescribed electronic modes as per section 269SURs. 5,000 per dayJCIT 
271EAny loan or deposit or specified advance is repaid in contravention of section 269TAmount of loan or deposit repaidJCIT 
271FFailure to furnish return of incomeRs. 5,000  
271FAFailure to furnish Statement of financial transaction or reportable accounts within the prescribed timeRs. 500 per day till period of noticeAssessing officerHowever, on failure to pay the same after expiry of notice penalty would be Rs. 1000 per day from the date of notice
271FBFailure to furnish return of fringe benefitsRs. 100 day per day till the failure continuesAssessing officer 
271FAAInaccurate information in statement of financial transaction or reportable accountsRs. 50,000Prescribed Income tax authorityPenalty shall be levied only if the prescribed authority is satisfied that: The inaccuracy is due to failure to comply with the due diligence requirement or is deliberate on the part of that person; orThe person knows of the inaccuracy at the time of furnishing the statement of financial transaction or reportable accounts =, but does not inform the prescribed Income tax authority or such other authority or agency; orThe person discovers the inaccuracy after the statement of financial transaction or reportable account is furnished and fails to furnish correct information as per section 285A(6)
271GFailure to furnish any information u/s 92D2% of the value of international transaction  
271GAFailure to furnish information or document u/s 285A, i.e. by Indian concern where transaction has effect of directly or directly transferring the right of management or control in respect to Indian concern2% of transaction value  
271GAFailure to furnish info or document 285A by Indian concern other casesRs. 5,00,000  
271GBFailure to furnish report u/s 286 i.e. report in respect of international groupPenalty of Rs. 5,000 every day for 1st one month where the failure continues and there after Rs. 15,000 per day beyond the period of 1 month  
271GBFails to provide the information and document to the income tax authority in prescribed time mentioned in noticeRs. 5000 per day from the day on which the period for furnishing the information and document expires  
271GBIf failure referred above continues after an order has been served by the income tax authorityRs. 50,000 for every day  
271GBWhere entity provides inaccurate information in report u/s 286Rs. 5,00,000  
271HFailure to furnish TDS or TCS statementPenalty equal to minimum of Rs. 10,000 which may extend to Rs. 1 Lakh  
271IFailure to furnish information or furnishing inaccurate information under section 195 i.e. TDS on sum payable to Non residentRs. 1,00,000AO 
272AAFailure to comply with section 133B i.e. failure to provide information to income tax departmentSum which may extend to Rs. 1000AO, JCIT 
272BFailure to comply with section 139A i.e. does not quote PAN no or quotes wrong PANSum which may extend to Rs. 10000AO 
271JFurnishing incorrect information in reports or certificatesRs. 10,000 for each such report or certificatesAO, CIT(A) 
271FABFailure to furnish statement or information or document by an eligible investment fundRs. 500,000  
272AFailure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc.Rs. 10,000 for each default  
271AADPenalty for fake invoices and false entriesEqual to the amount of fake invoice or false entriesAssessing officer